Wall Street finishes mostly flat in thin trade

Traders work on the floor of the New York Stock Exchange, August 1, 2011. Stocks turned negative after a strong opening on Monday as relief over a last-ditch debt deal in Washington faded after a weak reading on the manufacturing sector.

NEW YORK (Reuters) - Stocks ended flat on Tuesday after fluctuating between small gains and losses in a light-volume session, as investors took a breather following a 5 percent rally last week.

The S&P 500 turned positive for the year on Friday, with improving economic data boosting equities. Gains were amplified by better-than-expected data on consumer confidence, which hit an eight-month high in December, as Americans grew more upbeat about the labor market and their financial situations.

But after a strong rally and with trading volume light, investors were reluctant to draw many conclusions from the move.

"This is a tough week to trade on technicals or fundamentals mostly because the larger players are off the desk," said Joseph Cusick, senior market analyst at OptionsXpress Holdings Inc in Chicago.

About 3.59 billion shares exchanged hands on the New York Stock Exchange, NYSE Amex and Nasdaq, sharply below the year's daily average of about 7.9 billion shares.

One of the day's few big movers was Sears Holdings Corp (SHLD.O). Sears' stock plummeted 27.2 percent to end at $33.38 after falling to a new 52-week low of $33.26. The retailer said it plans to close 100 to 120 Kmart and Sears stores and said fourth-quarter earnings would fall by more than half from a year ago.

The outlook from Sears dragged on other retailers. JC Penney (JCP.N) shares fell 1.1 percent to $35.29. Sears' travails also hit shares of Whirlpool Corp (WHR.N), which last year got 8 percent of its sales through the retailer. Whirlpool shares fell 8.9 percent to $46.62.

The Dow Jones industrial average .DJI dipped 2.65 points, or 0.02 percent, to 12,291.35 at the close. But the Standard & Poor's 500 Index .SPX inched up 0.10 of a point, or 0.01 percent, to close at 1,265.43. The Nasdaq Composite Index .IXIC added 6.56 points, or 0.25 percent, to end at 2,625.20.

For the year, the Dow is up 6.2 percent and the Nasdaq is down 1 percent. The S&P's performance is turning out to be the flattest in more than 40 years. The index is up less than 1 percent, its smallest move in either direction since 1970.

Doug Roberts, chief investment strategist at Channel Capital Research.com in Shrewsbury, New Jersey, said stocks were likely to drift higher into the end of the year even if gains were slight.

"We'll probably have a slight drift upwards, but there's not a lot of volume," he said. "In the absence of any bad news, we could see a drift up over the next four days."

Entertainment companies' shares also fell. Regal Entertainment Group (RGC.N) fell 3.6 percent to $11.89 and Carmike Cinemas (CKEC.O) lost 0.9 percent to $7.03.

The CBOE Volatility Index, or VIX.VIX , Wall Street's fear gauge, shot up 5.7 percent to 21.91. But traders said the gains were mostly technical due to adjustments in positions ahead of the three-day holiday.

"Now that we are back, market makers are raising volatility, putting premiums into the VIX cash. January futures are in at around $25.50. We are seeing the holiday effect," said Jamie Tyrrell at Group 1 Trading in Chicago.

U.S. single-family home prices fell slightly more than expected in October, according to S&P/Case-Shiller data, coming after better-than-expected data on the sector last week.

(Reporting By Angela Moon; Editing by Jan Paschal)